Brown & Brown(US:BRO)2023-04-27 16:00Financial Performance - For the three months ended March 31, 2023, total revenues increased by 23.4% to $1,116.0 million compared to $904.7 million in the same period of 2022[58] - Core commissions and fees grew by 23.5% to $1,081.2 million, up from $875.7 million year-over-year[58] - The company reported a net income of $235.5 million, representing a 6.9% increase from $220.3 million in the first quarter of 2022[58] - Income before income taxes increased by $29.2 million or 11.0%, driven by net new business and acquisitions[40] - Organic revenue growth rate for the first quarter of 2023 was 12.6%, compared to 7.8% in the same quarter of the previous year[58] - EBITDAC - Adjusted for the first quarter of 2023 was $398.2 million, a 23.2% increase from $323.1 million in the prior year[58] - Total growth in commissions and fees was driven by a $116.3 million increase across all segments[72] Revenue Breakdown - Commissions and fees for Q1 2023 increased by $203.7 million to $1,108.0 million, a growth of 22.5% year-over-year, driven by $107.0 million from net new and renewal business, and $113.9 million from acquisitions[59] - The Retail segment generated $712.2 million in commissions and fees in Q1 2023, compared to $595.9 million in Q1 2022, marking a 19.5% increase[72] - The National Programs segment reported commissions and fees of $228.4 million in Q1 2023, up from $162.1 million in Q1 2022, representing a growth of 40.9%[72] - The Wholesale Brokerage segment saw commissions and fees rise to $123.1 million in Q1 2023 from $102.7 million in Q1 2022, an increase of 20.4%[72] - The Services segment reported commissions and fees of $44.3 million in Q1 2023, slightly up from $43.6 million in Q1 2022[72] Expenses and Costs - Employee compensation and benefits increased by 24.4% to $571.1 million, reflecting the company's growth and expansion efforts[58] - Other operating expenses increased by $33.9 million, or 26.7%, representing 14.4% of total revenues in Q1 2023, compared to 14.0% in Q1 2022[62] - Interest expense surged by $28.4 million, or 155.2%, in Q1 2023 due to higher average debt balances and increased floating-rate benchmarks[66] - Employee compensation and benefits expense increased by 24.4%, or $112.1 million, representing 51.2% of total revenues in Q1 2023, up from 50.7% in Q1 2022[61] - Total expenses rose by 22.1% to $503.3 million, driven by higher employee compensation and other operating expenses[76] Assets and Liabilities - Total assets as of March 31, 2023, were $13,399.9 million, up from $11,272.9 million year-over-year[58] - The company experienced a significant increase in reinsurance recoverable, which rose to $688.3 million from $24.8 million, indicating a substantial change in asset management[81] - Total debt as of March 31, 2023, was $3,926.3 million, a decrease of $15.8 million from December 31, 2022[121] - The company has $1,006.3 million outstanding under the Second Amended and Restated Credit Agreement tied to SOFR and $202.5 million under the Term Loan Credit Agreement tied to LIBOR[123] Cash Flow and Investments - Net cash provided by operating activities decreased to $59.8 million from $103.6 million year-over-year, a decline of about 42.3%[81] - The company reported a net cash used in investing activities of $43.2 million, significantly lower than $445.8 million in the previous year, indicating a reduction in investment outflows[81] - Payments for businesses acquired, net of cash acquired, were $37.6 million, a notable decrease from $436.0 million in the prior year, suggesting a shift in acquisition strategy[81] - Capital expenditures surged by 200.0% to $4.8 million, indicating increased investment in growth initiatives[76] Tax and Regulatory - The effective tax rate on income from operations increased to 20.0% in Q1 2023 from 16.9% in Q1 2022, primarily due to lower tax benefits from restricted stock awards[70] - Future acquisition contingency payments are estimated at $535.9 million, including $254.2 million of current and non-current estimated acquisition earn-out payables[119] Strategic Outlook - The company anticipates continued growth in Organic Revenue, supported by strategic acquisitions and market expansion initiatives[72] - The company maintains a conservative balance sheet with access to up to $1.9 billion of incremental borrowing capacity as of March 31, 2023[113]